Pound traders await UK growth report for BoE

London - The pound was little changed versus the dollar and euro before a report analysts said will show the UK economy expanded for an 11th straight quarter, adding weight to speculation the Bank of England is moving closer to raising interest rates.

Sterling climbed from the lowest level in more than a week against the US currency on Monday. Gross domestic product rose 0.6% in the third quarter, according to the median estimate of economists in a Bloomberg survey. That compares with the 0.7% pace reached in the previous three months.

Even as data suggest the economy may be strong enough to withstand tighter monetary policy, traders have been pushing back bets on the timing of an increase amid slowing global growth in recent months.

“We get third quarter GDP today, it’s expected to be a little bit softer than the second quarter but still perfectly strong,” John Wraith, head of UK rates strategy at UBS Group AG in London, said in an interview on Bloomberg Television’s “Countdown” with Manus Cranny.

“From a domestic perspective, a rate hike shouldn’t be more than a year away frankly, but there are these external issues. The market has made its mind up and circumstances will dictate if it’s got a little too defensive.”

The pound was at $1.5347 as of 10:21, after sliding to $1.5306 on Monday, the lowest since October 14. Sterling was at 72.02 pence per euro after reaching 71.69 pence on October 23, its strongest level since August 21.

Carney comments

BOE Governor Mark Carney said that any move was “a possibility, not a certainty” in an interview with the Mail on Sunday newspaper, while forward contracts based on the sterling overnight index average, or Sonia, suggest that a full 25 basis- point increase in the BOE’s key rate won’t come until after December 2016.

UK government bonds rose for a second day as the Debt Management Office prepared to auction 3 billion pounds of benchmark 10-year gilts.

The 10-year yield dropped two basis points to 1.81%. The 2% bond due in September 2025 gained £2.05 per £1 000 face amount, to 101.735. The yield fell three basis points on Monday.